Wells Fargo OFS
First electronic banking product in 1989 First major U. S. ank to offer Internet access Wells Fargo Online Financial Services (A) Harvard Case Solution & Analysis Wells Fargo, the leader in electronic banking transactions Balanced Scorecard in its online inancial services group (OFS) to track and measure performance. OFS Group develops and supports services that allow existing and future customers to transact banking over the Internet. The new division is facing rapid change and must invest heavily in new technologies and the development of innovative products and services.
OFS has been found difficult to balance the need for a clearly articulated strategy and measurable goals with the flexibility required in a dynamic environment. Wells Fargo was a culture that encompasses financial performance. However, OFS management believes that its business can not be measured and valuated on the basis of financial indicators alone. For example, the group was not yet profitable, but under the condition that a critical component of long-term strategy of the bank.
OFS Group believed that the Balanced Scorecard will allow them to develop a number of complex, multi-dimensional measures for assessing the performance of its objectives and to communicate and update their strategies in a rapidly changing environment. “Hide by Robert S. Kaplan, Nicole Tempest Source: Harvard Business School 18 pages. Publication Date: June 12, 1998. Prod. #: 198146- PDF-ENG Abstract Wells Fargo, the industry leader in electronic banking, has implemented a Balanced Scorecard in its online financial services group S) to track and measure performance.
The OFS group develops and supports services that allow existing and future banking customers to perform transactions via the Internet. The new division faces rapid change and must invest heavily in new technology and in the development of innovative products and services. OFS was finding it difficult to balance the need for a clearly articulated strategy and measurable objectives with the flexibility required in its dynamic environment. Wells Fargo had a culture that embraced financial metrics. Yet OFS management believed that its business could not be measured and evaluated on the basis of financial metrics alone.
For example, the group was not yet profitable, yet it provided a critical component to the bank’s long-term strategy. The OFS group believed that the Balanced Scorecard would allow them to develop a set of integrated, multidimensional measures to assess performance against its goals and to communicate and update its strategy in a rapidly changing environment. Email this CASE (FIELD) Wells Fargo Online Financial Services (A) by Robert S. Kaplan, Nicole Tempest Source: Harvard Business School 18 pages. publication Date: Jun 12, 1998. prod. 98146-PDF-ENG wells Fargo, the industry leader in electronic banking, has implemented a Balanced Scorecard in its online financial services group (OFS) to track and measure performance. The OFS group develops and supports services that allow existing and future banking customers to perform transactions via the Internet. The new division faces rapid change and must invest heavily in new technology and in the development of innovative products and services. OFS was finding it difficult to balance the need for clearly articulated strategy and measurable objectives with the flexibility required in its dynamic environment.
Wells Fargo had a culture that embraced financial metrics. Yet OFS management believed that its business could not be measured and evaluated on the basis of financial metrics alone. For example, the group was not yet profitable, yet it provided a critical component to the bank’s long-term strategy. The OFS group believed that the Balanced Scorecard would allow them to develop a set of integrated, multidimensional measures to assess performance against its goals and o communicate and update its strategy in a rapidly changing environment.
Wells Fargo Online Financial Services Since its inception, Wells Fargo Bank (Wells Fargo) has been focused on using financial measures to assess performance and make strategic decisions. Headquartered in San Francisco, Calitornia, Well Fargo was the second largest bank in California and was one of the largest banks in the United States with approximately $100 billion in assets in 1997. As of December 1997, Wells Fargo served 10 million households in ten western states, while operating over 1,900 staffed etail outlets and 4,400 automated teller machines.
As the banking industry has continued to grow, shifts in consumer needs and demands have caused banks to be much more aggressive and competitive in the services they provide. Wells Fargo has tasked its organization with being at the forefront of this competition in the banking industry. It has used outside- the-box thinking to produce such ideas as extended and weekend hours, ATMs, in grocery stores, and one-stop-shopping banking centers. By being the first to implement many of these ideas, Wells Fargo has been able to enhance its brand image and attract many new consumers.
This was clearly the case in 1995 when Wells Fargo launched into the Online Financial Services (OFS) realm (Electronic banking, PC Banking, Internet Banking). The OFS group started off slow, with approximately only 10,000 consumers, or one percent of its current client base accessing their accounts via the web. Those numbers did not stop Wells Fargo OFS group from continuing to expand its online presence, and soon it introduced items, such as a website and online bill pay.
Management understood the importance of the consumer continuum and felt strongly that the internet was not only the next step, but would eventually be a vital art of everyday life, paralleling expected PC and internet growth. While WFOFS continued to request more resources in an attempt to attract more consumers to OFS, it still faced many issues. First, as a first mover it needed to continue to bolster and improve their client base accessing their accounts via the web. Wells Fargo was in a growth environment where new projects and opportunities were raised both internally and externally.
Secondly, as Wells Fargo began to have success in its OFS group, many banks were quick to implement copycat products, increasing competition in the online financial services market. Finally, cost and revenue recognition were not concrete with the OFS group. Costs were being incurred to start this new department, but OFS was saving costs that other departments would have incurred. Wells Fargds stance on success in the past had strictly been financial, but the OFS results were not as clear or as quickly understood by internal and external stakeholders.
Therefore, Wells Fargo needed a new standard to measure success, one that not only focused on financials, but also on strategy and creating long-term value for its company and stakeholders. Developing a Balanced Scorecard General reasons / benefits of uses scorecard – Specific reasons for WF to apply the scorecard As mentioned previously, in the mid-eignties WF nad become increasing customer centric with extended hours and increased accessibility but this change has clashed a culture that focused primary on financial measures.
It was understood that something needed to change in order to shift the focus to longer term goals and better align daily activity to its long-term strategy. Wells Fargo needed to develop a key piece of infrastructure to help synchronize the OFS’ strategy with their daily xecution plans and translating those executions into measurable results. This tool would enable the OFS group to communicate with the senior management team of Wells Fargo but it would also allow it to communicate with other departments across the Wells Fargo company.
Wells Fargo decided to develop a balanced scorecard for two main reasons. First, the balanced scorecard provided a mechanism to ensure the OFS’ group plans supported its overarching vision while creating a set of objective measures of performance. Second, the balance scorecard put a premium on the elements that make up success y placing a strong emphasis on quantitative measures for evaluating business performance. The balanced scorecard helps managers stay in tune with all of the objectives.
More specifically: – The leaders of Wells Fargo Online Financial Service organization recognized that financial measures only were insufficient in capturing and communicating the status, goals, and performance of their business unit. They needed to identify the factors that drove their business and develop a way to measure them. – The constantly changing nature of the technology required that the OFS constantly adjust to keep up.
Products should be offered in conjunction with related products, for example if a customer if seeking checking their balance, rates for Mortgages of a 3rd party provide should non-intrusively be listed along the border of the website. In order to insure Wells Fargo’s Online services are providing a full solution for their customers needs they should expand their portfolio of products available online to include all financial services appropriate. Wells Fargo should improve the actual performance of the site itself to support the additional unctionality and services being offered.
Improved site performance will insure that there are no lost opportunities for revenue due to downtime or slow time. Finally in support of their seamless integration of cross selling and expanded portfolio objective, Wells Fargo should Deepen the relationship with the 3rd Party Alliance Partners that support their non-branded offerings. The deepened relationship should include coop-marketing opportunities on the partner websites and reciprocal referral links to encourage their customers to enroll for Wells Fargo Online banking . Improve functionality from “Click to Close”
Seamless Integration of Cross Selling Expand Product Portfolio Improve Site Performance Deepen Relationship with 3d Party Alliance Partners Objectives for reducing cost per customer Wells Fargo should have four primary objectives when pursuing the goals of reducing cost per customer. First they should focus on reducing resolution time for issues for both technical and enrollemnt issues. This can be done by training call center associates to quickly help the customers. A reduced resolution time means less labor, happier customers and more enrollments.
As those calls are coming in the call center ssociates should be thoroughly record issues so that Wells Fargo associates can study and address the root causes of calls Wells Fargo. Using that information they can now develop self help tools for enrollment that will be more effective in quickly getting customers enrolled and reduce the number ot calls and emails needed to resolve issues. Often customers would prefer to use self help tool in favor of calling a help center so again by improving a functionality of the site itself call center expenses could be reduced while pleasing the customer with improved functionality.
As the functionality of the website is improved adding customers to spread the cost of service should be the next priority. By stream-lining the process of enrollment and making it easier Wells Fargo can make enrollment quicker and cheaper. Finally Wells Fargo should address non-enrollment issues the same way as the enrollment issues, by studying the root cause of issues or complaints and using the information to improve the “Help” Feature as issues are identified. Reduce Resolution time for technical and enrollment issues Develop Self Help Tools for Enrollment Increase Ease of Online Enrollment
Improve “Help” Feature Functionality What elements of this case still apply today – russell Elements that apply today: 3 strategies: Adding and retaining high value customers, increasing revenue per customer, reducing cost per customer Innovaton and adapting to meet customer needs: -2004 webMethods Customer Innovation Award Winner The Wells Fargo – Wachovia Blog is created when Wachovia became part of Wells Fargo. The purpose is to help customers understand more about what’s going on – post merger. Guided By History – This blog is intended to help provide a rich online xperience that bridges events in the past with an outlook on the future.
The Student LoanDown – this is a blog aimed at helping students’ finance their college education. Stagecoach Island – Stagecoach Island is an online virtual world created by Wells Fargo for young adults. The purpose is to help young adults connect with friends and make new ones, and learn smart money management. CEO Blog – Get the inside scoop on what’s cooking in Wells Fargo’s product areas with the [email protected] blog. What new products are we thinking about building for our commercial customers? What hanges are we making to existing treasury management products?
Log into CEO portal and visit our blog today. Cross sell branded and nonbranded products to increase revenue per customer: – average cross sell ratio for financial institutions is 2, WFOFS is 5. 5 Develop and implement cost effective marketing programs: -Bottom line: The bank’s willingness to try new things has created an impressive lists First U. S. bank with a blog First bank with a student loan blog First bank with a business banking blog First bank in the world with a Second Life presence.